Just hours after Secretary of State Hillary Clinton left Myanmar last week, property prices began to soar.

In central Yangon, an area of dilapidated colonial-era buildings, one property shot up to $1.8 million from $1.5 million.

"He said he would be stupid not to ask for more," said German businessman Floyd Bennit, recounting what the developer told him and a partner while they were scoping out prospective investment properties in Myanmar's largest city on Saturday.

The price hike reflects shoots of optimism among investors sizing up the resource-rich former British colony following the most dramatic changes since the military took power in what was then known as Burma in a 1962 coup.

While many Western multinationals remain publicly cautious about the investment prospects of a country entangled in U.S. and European sanctions following years of human rights abuses, Yangon's five-star hotels tell a different story.

Executives from a range of countries and industries huddle in groups in darkened lobbies or dine with their Burmese contacts in restaurants. U.S. sanctions are a hot topic, as they have been since 1988 when the United States first imposed them following a crackdown on student protests that killed thousands.

But the conversation has changed. It is no longer a matter of whether they will be lifted, but when.

In interviews with Reuters, many executives said Clinton's Nov. 30-Dec. 2 visit — the first by a U.S. secretary of state in 50 years — had radically altered the investment mindset even if companies had yet to say so publicly.

"It's a country that is very well placed in terms of geography, in terms of demographics and in terms of timing," Andrew Pullar, an investment manager with the Sentient Group, a resource-focused private equity outfit, said in Yangon.

"There has been a confluence of events that's made it a very interesting place."

Many of these executives expect sanctions to be gone by next year or by 2013 at the latest, opening up one of Asia's final frontiers — a country of 55 million people that was among the region's richest just half a century ago before the coup ushered in 49 years of disastrous and brutal military rule.

As big as France and Britain combined, Myanmar sits strategically between India and China with ports on the Indian Ocean and Andaman Sea, all of which have made it a vital energy security asset for Beijing's landlocked western provinces and a priority for Washington as President Barack Obama strengthens engagement with Asia.

Myanmar, whose sought-after resources include natural gas, timber and precious gems, is building a multi-billion-dollar port through which oil can reach a 790-kilometre pipeline now under construction with Chinese money and workers.

That, along with hydro-power dams and highway projects, underpins more than $14 billion of pledged Chinese investment in Myanmar's 2010/11 (April-March) fiscal year, taking total foreign direct investment promises to $20 billion from just $300 million a year before, official data show.

But there are plenty of risks. Infrastructure is in tatters, bureaucracy is stifling, laws are weak or non-existent and Myanmar's roads, ports and highways are terrible. Still, many businesses are putting plans in motion, expecting change.

Last week, as Clinton was visiting, a delegation of nearly 30 German businesses toured Yangon and the capital Naypyitaw to size up the country's prospects. Most represented small and medium companies, but there were some big names in the group, including Commerzbank AG, Germany's second-biggest bank, and DEG, the German Investment Corporation.

India, Vietnam and the Chinese province of Guangdong have all had trade shows in Yangon, the former capital, in the past three weeks. The Industrial and Commercial Bank of China, the world's biggest bank by market value, had a branch opening ceremony the week Clinton was in town.

Local sources said Chevron Corp executives were also in Yangon in recent weeks, although this was not confirmed by the company.

Chevron is among a handful of U.S. companies allowed to do business in Myanmar under a clause that excludes investments that began before sanctions were put in place.

"We're very proud of our work there," Rhonda Zygocki, Chevron's executive vice president of policy and planning, told Reuters on the sidelines of the World Petroleum Congress in Doha. "It's a positive sign that the Secretary was there so we'll be monitoring developments."

Will Chevron expand its operations? "By law we are prohibited," she said. "Things would have to change legally for that to happen so it's a positive sign that the Secretary's visit was so constructive."

"Certainly they have the resource potential, but at this state we have to wait," Rex Tillerson, Exxon's chairman and chief executive, told Reuters in Doha.

France's Total SA, which already has a project in Myanmar, has said it would like to play a bigger role pending concrete signs of democratic reform.

"It is a positive sign," Jean-Marc Fontaine, Total's vice president of sustainable development and coordination, said of Clinton's visit.

Consumer brands such as Coca-Cola Co are waiting in the wings. "The company would only consider exploring business opportunities in Myanmar at the appropriate time," a Coca-Cola spokesman said, citing the need to comply with relevant laws.

While Western firms have been shut out by sanctions, Myanmar's Asian neighbors such as Singapore and Thailand have jumped in. Most of the hotels popular with foreign visitors are run by Asian chains.

Room rates have risen sharply since last year in response to a rise in tourists and businessmen. At the Strand Hotel, Yangon's ritziest address run by GMH, which operates from Singapore, the cheapest room is quoted at $660, compared with $350 a year ago.

For German businessman Bennit and his friend, it was the fourth trip to Yangon in three months, beginning in September after a diplomat acquaintance in Yangon told them they had to see for themselves the transformation under way, a process that gathered momentum after the army nominally handed power to a civilian parliament in March following elections last year.

"The atmosphere now is very good and it looks like it's going to be irreversible," said Bennit, who runs a sourcing company based in Vietnam.

But the sustainability of Myanmar's reforms is not a foregone conclusion.

President Thein Sein and parliament speaker Thura Shwe Mann, backed by military chief Min Aung Hlaing, are leading the changes in the former army-run country that in recent months has freed more than 200 political prisoners, eased some media controls, allowed labor unions and legalized public protests, among other reforms.

More changes are promised, but connected businessmen say hardliners in the leadership remain resistant to change and that the president is moving cautiously.

Nay Zin Latt, a writer, hotelier and one of Thein Sein's political advisers, said the biggest risk to reforms were officials unable to adapt to the new reality.

"Some of them are not very adaptive to the new culture, new practices," he said.

Aung San Suu Kyi, the 1991 Nobel Peace Prize winner freed from house arrest last year, has urged foreign governments to support the reforms.

Christian Oram, a British businessman who has worked in the information technology sector in Myanmar for 13 years and now plans a $30 million Myanmar-focused fund investing in businesses such as boutique hotels and food processing, said ending sanctions would be the real turning point.

"Myanmar provides a really good risk-reward situation," he said. "The early growth phase promises potentially extraordinary returns. You can't get extraordinary returns in Vietnam anymore, or Thailand... In Myanmar we are just getting started."

A foreign lawyer who works in Yangon said the list of challenges for foreign businesses was long and included some potential deal-breakers.

Among them: an arcane foreign exchange regime with multiple rates; land rights rules that permit only short lease terms; the inability to transfer shares of Myanmar companies directly to foreigners; and the fact that Myanmar is not a signatory to a 1958 U.N. convention on arbitration that helps companies receive impartial rulings in disputes and avoid local court systems.

Change will come, he said, but he expects "a complicated and drawn out process".

Pullar, making his first trip to Myanmar on behalf of a private equity firm with $2.5 billion under management in natural resources around the world, is happy to wait.

"Twenty years from now this place will have a vibrant mining sector," he said. "I wouldn't be happy to jump in right now. Too much needs to be done ... it's not about one visit. It's about coming back five or 10 times before we do something here."

Bennit, too, says Myanmar isn't quite there yet.

"There are a lot of things that will come, but for now it is still about six months off. Now it's all about doing fact-finding," he said in the lobby bar of Yangon's Park Royal Hotel, run by Singapore-based Pan Pacific Hotels Group.

Even if the government can enact a set of revised, investor-friendly laws and cut bureaucracy, the road and transport system is woeful, power cuts are the norm and land prices are already "unrealistic" in Yangon, he added.

Illustrating his point, Ko Win Bo, an estate agent at Kyansitmin Real Estate, said land prices at an industrial zone on the western outskirts of Yangon now cost up to 7,000 kyat (per sq ft), compared with 250 kyat the government sold to original developers a few years ago.

The cost of labor has also been a surprise.

Textile workers in Myanmar are paid about $100 a month, whereas in Vietnam it is about $150, said Bennit, who lives in Ho Chi Minh City.

"But you get real value for $150 -- an experienced sewer, someone who has done Hugo Boss or Prada. That wouldn't be the case here," he said.

Wael Elmawie, an ebullient Lebanese businessman who has worked in Myanmar for 12 years through stretches when he and others thought the business environment couldn't get worse, smells opportunity around the corner.

"It feels great now," said Elmawie, general manager of PEB Steel Buildings Co Ltd and a former representative in Myanmar of the Saudi firm Zamil Steel.

A year ago he had eight people working for him in a business that designs steel buildings which are packaged in Vietnam and shipped to Myanmar for assembly. This year he has expanded to 22 in Yangon and Naypyitaw.

"That's in preparation for 2012 because I am expecting dozens of contracts," he said. "I hope my time has come to make money."